ORDERS ISSUED UNDER BANK HOLDING COMPANY ACT.

Orders Issued Under Section 3 of the Bank Holding Company Act

ANB Corporation

Muncie, Indiana 

Order Approving the Acquisition of a Bank Holding Company

ANB Corporation ("ANB"), a bank holding company within the meaning of the Bank Holding Company Act ("BHC Act"), has requested the Board's approval under section 3 of the BHC Act (12 U.S.C. [sections] 1842) to acquire Farmers State Bancorp ("Bancorp") and thereby to acquire The Farmers State Bank of Union City ("Bank"), both in Union City, Ohio.

Notice of proposal, affording interested persons an opportunity to submit comments, has been published (64 Federal Register 6361 (1999)). The time for filing comments has expired, and the Board has considered the proposal and all comments received in light of the factors set forth in section 3 of the BHC Act.

ANB is the 33rd largest depository institution in Indiana, controlling deposits of approximately $417.5 million, representing less than 1 percent of total deposits in depository institutions in Indiana ("state deposits").(1) Bank is the 179th largest depository institution in Ohio, controlling deposits of $63.3 million, representing less than 1 percent of state deposits. Bank also is the 112th largest depository institution in Indiana, controlling approximately $18.2 million in deposits, representing less than 1 percent of state deposits.(2) On consummation of the proposal, ANB would become the 32nd largest depository institution in Indiana, controlling $435.7 million, representing less than 1 percent of state deposits.

Interstate Analysis

Section 3(d) of the BHC Act allows the Board to approve an application by a bank holding company to acquire control of a bank located in a state other than the home state(3) of such bank holding company, provided that certain conditions are met. For purposes of the BHC Act, the home state of ANB is Indiana, and ANB proposes to acquire a bank in Ohio. The proposed transaction meets all of the conditions for an interstate acquisition that are enumerated in section 3(d).(4) In view of all the facts of record, the Board is permitted to approve the proposal under section 3(d) of the BHC Act.

Competitive Considerations

The BHC Act prohibits the Board from approving an application under section 3 of the BHC Act if the proposal would result in a monopoly or would be in furtherance of any attempt to monopolize the business of banking. The BHC Act also prohibits the Board from approving a proposed combination that would substantially lessen competition or tend to create a monopoly in any relevant banking market, unless the Board finds that the anticompetitive effects of the proposal are clearly outweighed in the public interest by the probable effect of the proposal in meeting the convenience and needs of the community to be served.

ANB and Bank compete in the Muncie, Indiana, banking market ("Muncie banking market").(5) The Board has carefully reviewed the competitive effects of the proposal in the Muncie banking market in light of all of the facts of record, including the characteristics of the market and the projected increase in the concentration of total deposits in insured depository institutions in this market ("market deposits") as measured by the Herfindahl-Hirschman Index ("HHI") under the Department of Justice Merger Guidelines ("DOJ Guidelines"). The Board also has carefully considered the number of competitors that would remain in the market after consummation of the proposal.

ANB is the second largest depository institution in the Muncie banking market, controlling $355.5 million in deposits, representing 23 percent of market deposits.(6) Bank is the seventh largest depository institution in the market, controlling $81.5 million in deposits, representing 53 percent of market deposits. On consummation of the proposal, ANB would remain the second largest depository institution in the market, controlling deposits of $437 million, representing 28.3 percent of market deposits. The HHI would increase by 243 points to 2450.(7)

The Board believes that several characteristics of the Muncie banking market mitigate the proposal's potential anticompetitive effects. First, a significant number of other depository institutions would have the market share and resources to compete effectively in the banking market. Eight bank and thrift institutions, including ANB, would remain in the market after consummation of the proposal, including several multistate banking organizations. Four of these institutions, including ANB, would each control market shares of 9 percent or more of market deposits and several large regional bank holding companies would continue to operate in the market.

The Muncie banking market also is attractive for entry. Data for the year ending June 30, 1998 show that the Muncie Metropolitan Statistical Area ("MSA"), which encompasses most of the population of the Muncie banking market, has had a larger increase in total deposits and per capita income than the increase on average in these statistics for other MSAs in Indiana. The market also has recently experienced de novo entry and entry by acquisition, including two entries by acquisition in 1998. Indiana, moreover, permits unrestricted intrastate branching.(8)

The Department of Justice reviewed the proposal and advised the Board that consummation of the proposal would not likely have any significantly adverse competitive effects in the Muncie banking market or any other relevant banking market. The Federal Deposit Insurance Corporation has been consulted and has not objected to the proposal.

Based on all the facts of record, and for the reasons discussed above, the Board concludes that consummation of the proposal is not likely to result in any significantly adverse effects on competition or on the concentration of banking resources in the Muncie banking market or any other relevant banking market, and that competitive factors are consistent with approval of the proposal.

Other Considerations

The BHC Act also requires the Board, in acting on an application, to consider the financial and managerial resources and future prospects of the companies and banks involved, the convenience and needs of the communities to be served, and certain supervisory factors. The Board has reviewed these factors in light of all the facts of record, including supervisory reports of examination assessing the financial and managerial resources of the organizations. Based on all the facts of record, the Board concludes that the financial and managerial resources and future Prospects of ANB, its subsidiary banks, and Bank are consistent with approval, as are the other supervisory factors the Board must consider under section 3 of the BHC Act. Considerations related to the convenience and needs of communities to be served, including the records of performance of the institutions involved under the Community Reinvestment Act (12 U.S.C. [sections] 2901 et seq.), also are consistent with approval of the proposal.

Conclusion

Based on the foregoing, and in light of all the facts of record, the Board has determined that the application should be, and hereby is, approved. Approval of the application is specifically conditioned on compliance by ANB with all the commitments made in connection with the application. For the purposes of this order, the commitments and conditions relied on by the Board in reaching its decision are deemed to be conditions imposed in writing by the Board in connection with its findings and decision and, as such, may be enforced in proceedings under applicable law.

The transaction shall not be consummated before the fifteenth calendar day after the effective date of this order, or later than three months after the effective date of this order, unless such period is extended for good cause by the Board or by the Federal Reserve Bank of Chicago, acting pursuant to delegated authority.

By order of the Board of Governors, effective April 1, 1999.

Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and Governors Kelley, Meyer, Ferguson, and Gramlich.

JENNIFER J. JOHNSON

Secretary of the Board

Banco Santander, S.A.

Madrid, Spain

(1.) Deposit data are as of June 30, 1998. In this context, depository institutions include commercial banks, savings banks, and savings associations.

(2.) Bank controls total deposits of $81.5 million, $18.2 million of which are booked in its branch office in Indiana. The balance of the bank's deposits are booked in its main office in Ohio.

(3.) 12 U.S.C. [sections] 1842(d). A bank holding company's home state is that state in which the total deposits of all banking subsidiaries of such company were the largest on July 1, 1966, or on the date on which the company became a bank holding company, whichever is later. 12 U.S.C. 1841(o)(4)(C).

(4.) See 12 U.S.C. [subsections] 1842(d)(1)(A) & (B) and 1842(d)(2)(A) & (B). ANB is adequately capitalized and adequately managed, as defined by applicable law. Bank has been in existence and operated continuously during the five-year minimum statutory period. On consummation of the proposal, ANB would control less than 10 percent of the total amount of deposits of insured depository institutions in the United States. All other requirements of section 3(d) of the BHC Act would be met on consummation of the proposal.

(5.) The Muncie banking market is defined as Delaware County excluding Salem township; Randolph County excluding Washington and Greensfork townships; Licking and Johnson townships in Blackford County, all in Indiana; and Jackson township in Darke County, Ohio.

(6.) Market share data are reported as of June 30, 1998. Market share data are based on calculations that include the deposits of thrift institutions at 50 percent. The Board previously has indicated that thrift institutions have become, or have the potential to become, significant competitors of commercial banks. See, e.g., Midwest Financial Group, 75 Federal Reserve Bulletin 386 (1989); National City Corporation, 70 Federal Reserve Bulletin 743 (1984). Thus, the Board has regularly included thrift deposits in the calculation of market share on a 50-percent weighted basis. See, e.g., First Hawaiian, Inc., 77 Federal Reserve Bulletin 52 (1991).

(7.) Under the revised DOJ Guidelines, 49 Federal Register 26,823 (June 29, 1984), a market in which the post-merger HHI exceeds 1800 is considered highly concentrated. The Department of Justice has informed the Board that a bank merger or acquisition generally will not be challenged (in the absence of other factors indicating anticompetitive effects) unless the post-merger HHI is at least 1800 and the merger increases the HHI by more than 200 points. The Department of Justice has stated that the higher than normal HHI thresholds for screening bank mergers for anticompetitive effects implicitly recognize the competitive effect of limited-purpose lenders and other nondepository financial entities.

(8.) Ind. Code Ann. [subsections] 28-2-13-19 & 28-2-16-15 (West 1998).

Order Approving Acquisition of a Bank Holding Company

Banco Santander, S.A. ("Santander"), a bank holding company within the meaning of the Bank Holding Company Act ("BHC Act"), has requested the Board's approval under section 3 of the BHC Act (12 U.S.C. [sections] 1842) to acquire BCH-USA, New York, New York ("Bank"), a wholly owned subsidiary bank of Banco Central Hispano-americano, S.A., Madrid, Spain ("BCH").(1)

Notice of the proposal, affording interested persons an opportunity to submit comments, has been published (64 Federal Register 9995 (1999)). The time for filing comments has expired, and the Board has considered the application and all comments received in light of the factors set forth in section 3 of the BHC Act.

Santander, with total consolidated assets of approximately $181 billion, is the largest banking organization in Spain.(2) In the United States, Santander operates a branch in New York, New York; and an agency and an Edge corporation in Miami, Florida. Santander also controls Banco Santander Puerto Rico, San Juan, Puerto Rico ("Santander-PR"), a subsidiary bank that also maintains a branch in New York, New York. Santander also has an indirect interest in Citizens Financial Group, Inc., Providence, Rhode Island, a registered bank holding company.(3) In addition, Santander engages directly and through subsidiaries in a number of permissible nonbanking activities in the United States.

BCH, with total consolidated assets of approximately $95 billion, is the third largest banking organization in Spain. In addition to Bank, BCH's U.S. banking operations consist of branches in New York, New York, and Miami, Florida.

Interstate Analysis

Section 3(d) of the BHC Act allows the Board to approve an application by a bank holding company to acquire control of a bank located in a state other than the home state of such bank holding company if certain conditions are met.(4) For purposes of the BHC Act, the home state of Santander is Rhode Island and Santander proposes to acquire control of a bank in New York.(5) All the conditions for an interstate acquisition under section 3(d) are met in this case.(6) In light of all the facts of record, the Board is permitted to approve the proposal under section 3(d) of the BHC Act.

Competitive Considerations

As noted above, Santander and BCH operate various banking entities that compete in the Metropolitan New York-New Jersey banking market.(7) Each of these banking entities is relatively small and consummation of the proposal would result in an increase of less than one point in the Herfindahl-Hirschman Index ("HHI") for the Metropolitan New York-New Jersey banking market. The banking market would remain unconcentrated with numerous competitors operating in the market.(8) Based on all the facts of record, the Board concludes that consummation of the proposal would not have a significantly adverse effect on competition or on the concentration of banking resources in the Metropolitan New York-New Jersey banking market or any other relevant banking market.

Financial and Managerial Considerations

The BHC Act also requires the Board to consider the financial and managerial resources and future prospects of the companies and banks involved in the proposal. Santander's capital ratios exceed the minimum levels that would be required under the Basle Capital Accord, and are considered equivalent to the capital that would be required of a U.S. banking organization. Bank's capital ratios exceed the "well capitalized" thresholds and would be unchanged by this transaction. Based on these and all the other facts of record, including confidential examination and other supervisory information concerning the foreign banks involved in the proposal and their existing U.S. operations and the commitments provided in this case, the Board concludes that financial and managerial factors are consistent with approval.(9)

Convenience and Needs Considerations

The Board also has carefully considered the effect of the proposal on the convenience and needs of the communities to be served in light of all the facts of record. The Board has long held that consideration of the convenience and needs factor includes a review of the records of the relevant depository institutions under the Community Reinvestment Act (12 U.S.C. [sections] 2901 et seq.) ("CRA"). An institution's most recent CRA performance evaluation is a particularly important consideration in the applications process because it represents a detailed on-site evaluation of the institution's overall record of performance under the CRA by the appropriate federal financial supervisory agency.

CRA Performance Examinations. Santander-PR, the only Santander banking operation that is subject to the CRA, received an "outstanding" rating at its most recent CRA performance evaluation from its primary federal financial supervisory agency, the Federal Deposit Insurance Corporation ("FDIC"), as of October 14, 1997.(10) Bank received a "satisfactory" rating from the FDIC at its most recent CRA performance evaluation, as of December 31, 1998.(11)

Santander's CRA Performance Record. According to examiners, Santander-PR's lending activities reflected responsiveness to credit needs in the bank's assessment area.(12) From January 1 through September 30, 1997, Santander-PR originated more than 3,200 small business loans, totaling more than $247 million, and more than 100 small farm loans, totaling more than $9 million. Of these loans, Santander originated more than 400 of the small business loans, totaling more than $36 million, and 16 of the small farm loans, totaling more than $700,000 in low-and moderate-income ("LMI") census tracts.

Examiners stated that from October 1, 1996, through September 30, 1997, Santander-PR originated 180 Small Business Administration ("SBA") loans totaling more than $26 million: Examiners noted that Santander-PR had been designated a "Preferred Lender" and "Certified Lender" by the SBA. Examiners also commended the bank on the distribution of its loans to businesses of different sizes. Of the small business loans made by Santander-PR since its last CRA evaluation, 22 percent were to businesses with gross annual revenues of less than $50,000, and 74 percent were to businesses with gross annual revenues of less than $250,000.

Examiners also noted that Santander-PR had made $81 million in qualified community development loans since its October 1995 CRA evaluation, including a loan to a consortium of small poultry processors under the Rural Housing and Community Development Service guarantee program to construct a poultry processing facility in a low-income census tract in Salinas, Puerto Rico; a loan to a builder under the affordable housing guidelines set by the Government Development Bank of Puerto Rico to construct 49 single-family homes in a moderate-income census tract in Barceloneta, Puerto Rico; and a loan to construct a condominium project in a moderate-income census tract in Rio Piedras, Puerto Rico, with one-third of the units designated for affordable housing.

Bank's CRA Performance Record. On May 21, 1998, the FDIC granted Bank's request for designation as a "wholesale institution" for purposes of evaluation under the CRA, and Bank's CRA activities have been focused on lending to community development intermediaries operating in its assessment area.(13) At Bank's December 31, 1998 examination, examiners noted that Bank's CRA performance had improved since its previous CRA performance evaluation because the bank had improved its ascertainment and financial support of local community development initiatives consistent with its resources and capabilities.

Examiners noted that Bank's community development lending (including new originations from January 1997 through December 1998 and prior loans funded with outstanding balances) totaled more than $1 million. Examiners stated that, since its last CRA examination, Bank has increased its community development lending by providing six commitments totaling $900,000, representing a 600 percent increase in funding.(14) Examiners also stated that Bank's levels of qualified investments and community development service since its prior CRA evaluation were adequate.

Conclusion on Convenience and Needs Considerations. The Board has carefully considered all the facts of record, including the comments received and the public CRA performance records of the institutions involved. In particular, the Board has considered the efforts by Bank to improve its CRA performance, as verified by the FDIC in a recently concluded CRA performance examination, and the fact that this proposal represents an acquisition by an applicant that has maintained a consistently outstanding CRA performance record. Based on a review of the entire record, including the relevant reports of examination, the Board concludes that considerations relating to the convenience and needs of the communities to be served are consistent with approval.

Other Supervisory Considerations

Under section 3 of the BHC Act, the Board may not approve an application involving a foreign bank unless the bank is "subject to comprehensive supervision or regulation on a consolidated basis by the appropriate authorities in the bank's home country."(15) The Board previously determined that Santander was subject to such supervision and regulation,(16) and based on all the facts of record, the Board has concluded that Santander continues to be subject to comprehensive supervision and regulation on a consolidated basis by its home country supervisor.

The BHC Act also requires the Board to determine that the foreign bank has provided adequate assurances that it will make available to the Board such information on its operations and activities and those of its affiliates that the Board deems appropriate to determine and enforce compliance with the BHC Act and the International Banking Act ("IBA") (12 U.S.C. [sections] 3101 et seq.). The Board has reviewed restrictions on disclosure in jurisdictions where Santander has material operations and has communicated with relevant banking authorities concerning access to information. Santander has committed that, to the extent not prohibited by applicable law, it will make available tot the Board such information on the operations of Santander and any of its affiliates that the Board deems necessary to determine and enforce compliance with the BHC Act, the IBA, and other applicable federal law. Santander also has committed to cooperate with the Board to obtain any waivers or exemptions that may be necessary to enable Santander to make any such information available to the Board. In light of these commitments and other facts of record, the Board has concluded that Santander has provided adequate assurances of access to any appropriate information that the Board may request. For these reasons, and based on all the facts of record, the Board has concluded that the supervisory factors it is required to consider under section 3(c) of the BHC Act are consistent with approval.(17)

Conclusion

Based on the foregoing and all other facts of record, the Board has determined that the application should be, and hereby is, approved. The Board's approval of the proposal is expressly conditioned on Santander's compliance with all the commitments made in connection with the application. The commitments and conditions relied on by the Board in reaching this decision are deemed to be conditions imposed in writing by the Board in connection with its findings and decision and, as such, may be enforced in proceedings under applicable law.

The proposal shall not be consummated before the fifteenth calendar day after the effective date of this order, or later than three months after the effective date of this order, unless such period is extended for good cause by the Board or by the Federal Reserve Bank of New York, acting pursuant to delegated authority.

By order of the Board of Governors, effective April 1, 1999.

Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and Governors Kelley, Meyer, Ferguson, and Gramlich.

JENNIFER J. JOHNSON Secretary of the Board

(1.) Santander and BCH are two large foreign banks headquartered in Spain, each with modest operations in the United States. This application involves a review of the proposed combination of the U.S. operations of these banks as part of a merger of BCH with and into Santander, in which Santander would be the surviving corporation. On consummation, Santander would change its corporate name to "Banco Santander Central Hispano, S.A." Santander also has applied under the International Banking Act, 12 U.S.C. [sections] 3101 et seq., to retain BCH's direct U.S. branches and other offices. That application will be considered separately.

(2.) Asset data are as of December 31, 1998, using exchange rates then in effect. Ranking data are as of December 31, 1997.

(3.) Santander owns its indirect minority interest in Citizens Financial Group, Inc. ("Citizens") through The Royal Bank of Scotland Group pie and its subsidiary, The Royal Bank of Scotland plc, both of Edinburgh, Scotland. See Banco de Santander, S.A. de Credito, 78 Federal Reserve Bulletin 60 (1992).

(4.) 12 U.S.C. [sections] 1842(d). A bank holding company's home state is that state in which the total deposits of all banking subsidiaries of such company were the largest on July l, 1966, or the date on which the company became a bank holding company, whichever is later. 12 U.S.C. [sections] 1841(o)(4)(C).

(5.) For purposes of section 3(d) of the BHC Act, the home state of Santander is Rhode Island by virtue of Santander's indirect ownership interest in Citizens, a bank holding company in Providence, Rhode Island. See The Royal Bank of Scotland Group plc, 82 Federal Reserve Bulletin 428 (1996).

(6.) 12 U.S.C. [subsections] 1842(d)(1)(A) and (B) and 1842(d)(2)(A) and (B). Santander meets the capital and managerial requirements established by applicable law. On consummation of the proposal, Santander and its affiliates would control less than l0 percent of the total amount of deposits of insured depository institutions in the United States, and less than 30 percent of the total amount of deposits in New York. See N.Y. Banking Law [sections] 142-a (McKinney 1999). All other requirements of section 3(d) of the BHC Act also would be met on consummation of the proposal.

(7.) The Metropolitan New York-New Jersey banking market includes New York City; Nassau, Orange, Putnam, Rockland, Suffolk, Sullivan, and Westchester Counties in New York; Bergen, Essex, Hudson, Hunterdon, Middlesex, Monmouth, Morris, Ocean, Passaic, Somerset, Sussex, Union, Warren Counties, and a portion of Mercer County in New Jersey; Pike County in Pennsylvania; and portions of Fairfield and Litchfield Counties in Connecticut.

(8.) Market share data used to analyze the competitive effects of the proposal are as of June 30, 1997, and are based on calculations in which the deposits of thrift institutions are included at 50 percent. The HHI for the Metropolitan New York-New Jersey banking market would remain at 761 after consummation of the proposal. Under the revised Department of Justice Merger Guidelines, 49 Federal Register 26,823 (1984), a market in which the post-merger HHI is less than 1000 is considered to be unconcentrated. The Department of Justice has informed the Board that a bank merger or acquisition generally will not be challenged (in the absence of other factors indicating anticompetitive effects) unless the post-merger HHI is at least 1800 and the merger increases the HHI by more than 200 points. The Department of Justice has stated that the higher than normal HHI thresholds for screening bank mergers and acquisitions for anticompetitive effects implicitly recognize the competitive effects of limited-purpose lenders and other nondepository financial entities.

(9.) On May 18, 1998, the Board issued a temporary cease and desist order (the "Order") pursuant to section 8(c) of the Federal Deposit Insurance Act (12 U.S.C. [sections] 1818(c)) against Santander to address deficiencies in its anti-money laundering programs. See Issuance of Enforcement Actions, 84 Federal Reserve Bulletin 539 (1998). The Order arose out of an investigation into the improper activities of two employees of Santander's subsidiary bank in Mexico, Banco Santander Mexicano, S.A. In response to the Order, Santander completed an internal investigation of the subject accounts and transactions and reported its findings to the appropriate U.S. and Mexican authorities. In addition, Santander, with the assistance of outside counsel and independent auditors, conducted a review of its anti-money laundering policies and on June 30, 1998, submitted a confidential report to the Board on the adequacy of its procedures and a plan designed to ensure that the conduct described in the Order would not occur in the future. The Board received a comment from Inner City Press/Community on the Move ("Protestant") stating that the issues raised by the Order were grounds on which the application should be denied. In light of Santander's compliance with the Order to date, and its other efforts, the Board concludes that these matters do not warrant denial of the proposal.

(10.) Santander-PR also received an "outstanding" rating at its CRA performance evaluation by the FDIC, as of September 18, 1995. Examiners noted in the October 14, 1997, CRA performance evaluation that Santander-PR's branch in New York, New York, does not generally engage in domestic retail deposit or lending activities. The examiners found that the branch had performed in a satisfactory manner under the CRA when the branch was compared to similar institutions in the assessment area.

(11.) Bank received "needs to improve" ratings from the FDIC in two prior CRA performance evaluations, as of July 15, 1996, and May 31, 1995. Protestant argues that these earlier CRA ratings support a denim of the proposal. Bank's current CRA performance evaluation was recently completed by the FDIC, and its rating of "satisfactory" was announced by the bank after the date of Protestant's comment letter.

(12.) Examiners noted that Santander-PR did not engage in residential mortgage lending, but that Bank's affiliate, Santander Mortgage Corporation ("SMC"), offered affordable and first-time buyer programs sponsored by the Government National Mortgage Association. In addition, examiners stated that SMC offered Federal Housing Administration and Veterans Administration mortgage products.

(13.) See 12 C.F.R. 345.25 (community development test for wholesale institutions).

(14.) These commitments included a $150,000 three-year term loan to a nonprofit community development financial institution to assist with the construction of affordable housing; a three-year, low-interest $200,000 loan to a nonprofit community development support organization that acts as an intermediary by channeling grants, loans, and equity investments to underserved communities; and a two-year, low-interest $150,000 loan to the capitalization program of a nonprofit association that assists community development credit unions serving low-income communities and community groups seeking to form credit unions.

(15.) 12 U.S.C. [sections] 1842(c)(3)(B). As provided in Regulation Y, the Board determines whether a foreign bank is subject to consolidated home country supervision under the standards set forth in Regulation K. See 12 C.F.R. 225.13(a)(4). Regulation K provides that a foreign bank may be considered subject to consolidated supervision if the Board determines that the bank is supervised or regulated in such a manner that its home country supervisor receives sufficient information on the worldwide operations of the foreign bank, including the relationship of the bank and its affiliates, to assess the foreign bank's overall financial condition and compliance with law and regulation. See 12 C.F.R. 211.24(c)(1)(ii).

(16.) See, e.g., Banco Santander, S.A., 82 Federal Reserve Bulletin 833 (1996).

(17.) Protestant argues that the Board should deny Santander's application because the matters described by the Order referred to in footnote 9 raise questions about whether Santander is subject to comprehensive consolidated supervision by its home country supervisor under section 3 of the BHC Act. As noted above, in light of Santander's compliance with the Order to date, and its other efforts, the Board does not believe that these matters warrant denial of the subject proposal.

Community Capital Bancshares, Inc. Albany, Georgia 

Order Approving Formation of a Bank Holding Company

Community Capital Bancshares, Inc. ("CCB") has requested the Board's approval under section 3(a)(1) of the Bank Holding Company Act ("BHC Act") (12 U.S.C. [sections] 1842(a)(1)) to become a bank holding company by acquiring all the voting shares of Albany Bank & Trust, N.A., Albany, Georgia ("Bank"), a de novo bank.

Notice of the proposal, affording interested persons an opportunity to submit comments, has been published (64 Federal Register 9155 (1999)). The time for filing comments has expired, and the Board has considered the proposal and all comments received in light of the factors set forth in section 3 of the BHC Act.

CCB is a corporation formed for the purpose of acquiring control of Bank.(1) The Board previously has noted that establishment of a de novo bank enhances competition in the relevant banking market and is a positive consideration in an application under section 3 of the BHC Act.(2) Accordingly, the Board concludes that consummation of the proposal would not have a significantly adverse effect on competition or on the concentration of banking resources in any relevant banking market and that competitive considerations are consistent with approval. Based on all the facts of record, the Board also concludes that the financial and managerial resources and future prospects of CCB and Bank are consistent with approval of the proposal, as are the other supervisory factors the Board must consider under section 3 of the BHC Act.

The Board also has considered carefully the effect of the proposal on the convenience and needs of the communities to be served in light of all the facts of record, including a comment submitted on behalf of Business Research and Development, Albany, Georgia ("Commenter"). Commenter contends that Bank will not adequately serve the credit and banking needs of minorities nor of low- and moderate-income ("LMI") individuals and neighborhoods in the Albany area. Commenter also contends that Bank has not sufficiently marketed its proposed products and services to African Americans in Albany.(3)

Bank is a de novo insured depository institution and, accordingly, has no record of performance under the Community Reinvestment Act (12 U.S.C. [sections] 2901 et seq.) ("CRA"). Bank, however, has established a comprehensive CRA plan that details the products and services that Bank intends to offer to assist in meeting the credit, service and investment needs of Bank's entire community, including LMI neighborhoods. For example, Bank plans to offer a variety of housing-related loans, including first- and second-mortgages, home equity, and home improvement loans. Bank also plans to originate small business loans guaranteed by the Small Business Administration and lines of credit to help agricultural borrowers meet seasonal demand for credit. In addition, Bank intends to make available consumer loans and student loans to assist in meeting the credit needs of its local community, and to offer workshops in LMI neighborhoods on basic money management skills and the fundamentals of maintaining a bank account. Bank also would offer several types of deposit accounts, including a checking account with a $100 minimum balance, no monthly maintenance fees, and unlimited check-writing privileges.(4)

Bank's CRA plan provides that Bank will actively market its products and services throughout its community, including LMI neighborhoods, in several ways, including direct mail and telemarketing programs and the sponsorship of community programs. Bank also has held three public forums in the Albany area to inform members of the local community about Bank's proposed products and services,(5) and Bank plans to hold an additional three public forums in the Albany area before commencing operations. The Board notes, moreover, that Bank's President and Chief Executive Officer and Bank's Executive Vice President and Senior Loan Officer recently served in management positions at insured depository institutions that received "outstanding" ratings at their most recent CRA performance evaluation by their appropriate federal supervisory agency.

As noted above, the OCC recently approved Bank's application for a national bank charter after considering Bank's proposed assessment area and plans to meet the credit needs of the local community, including LMI areas, in light of substantially similar comments filed by Commenter. Consistent with the CRA, Bank has delineated a local assessment area within which the OCC, Bank's appropriate federal supervisory agency, will evaluate the performance of Bank under the CRA in future examinations.(6) Bank's delineated assessment area includes all of Dougherty County and the southern half of Lee County, both in Georgia. Bank's assessment area includes all of Albany and does not arbitrarily exclude LMI areas.

Based on all the facts of record, and for reasons discussed above, the Board concludes that considerations relating to the convenience and needs factor are consistent with approval of the application. The Board notes that the OCC will evaluate Bank's actual record of meeting the credit needs of the Albany community, including LMI neighborhoods, in future CRA performance examinations of Bank, and the Board will carefully consider that record in acting on future applications by CCB to acquire an insured depository institution.

Based on the foregoing, and in light of all the facts of record, the Board has determined that the application should be, and hereby is, approved.(7) The Board's approval is specifically conditioned on compliance by CCB with all the commitments made in connection with the application. For the purpose of this action, the commitments and conditions relied on by the Board in reaching its decision are deemed to be conditions imposed in writing by the Board in connection with its findings and decision and, as such, may be enforced in proceedings under applicable law.(8)

The acquisition of Bank shall not be consummated before the fifteenth calendar day after the effective date of this order, or later than three months after the effective date of this order, and Bank shall be open for business within six months following the effective date of this order, unless such periods are extended for good cause by the Board or the Federal Reserve Bank of Atlanta, acting pursuant to delegated authority.

By order of the Board of Governors, effective April 12, 1999.

Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and Governors Kelley, Meyer, Ferguson, and Gramlich.

ROBERT DEV. FRIERSON Associate Secretary of the Board

(1.) The Office of the Comptroller of the Currency ("OCC") recently approved Bank's application for a national bank charter, subject to the Board's approval of this application. See Letter from John O. Stein, II, Corporate Manager, Southeastern District Office, to Robert E. Lee, dated February 9, 1999.

(2.) See CFBanc Holdings, Inc., 85 Federal Reserve Bulletin 52 (1999); Wilson Bank Holding Co., 82 Federal Reserve Bulletin 568 (1996).

(3.) Commenter also contends that African Americans are not fairly represented in the management of CCB and Bank. The racial composition of an applicant's management is not a factor the Board is permitted to consider in acting on an application under section 3 of the BHC Act. The Board notes that the Equal Employment Opportunity Commission has jurisdiction to determine whether banking organizations such as CCB and Bank are in compliance with Federal equal employment opportunity statutes under the regulations of the Department of Labor. See 41 C.F.R. 60-1.7(a), 60-1.40.

(4.) Bank also plans to establish an additional branch in downtown Albany during its third year of operation. This branch would further increase Bank's ability to serve the banking and credit needs of its community, including African-American and LMI residents of Albany.

(5.) Before holding these public forums, Bank advertised the date, location, and purpose of the forums in a newspaper of general circulation in the Albany area.

(6.) See 12 C.F.R. 25.41(a).

(7.) Commenter has requested that the Board hold public meetings or hearings on the proposal. Section 3(b) of the BHC Act does not require the Board to hold a public hearing on an application unless the appropriate supervisory authority for the bank to be acquired makes a timely written recommendation of denial. The Board has not received such a recommendation from the OCC. Under its rules, the Board also may, in its discretion, hold a public meeting or hearing on an application to acquire a bank if a meeting or hearing is necessary or appropriate to clarify factual issues related to the application and to provide an opportunity for testimony, if appropriate. 12 C.F.R. 225.16(e). The Board has carefully considered Commenter's request in light of all the facts of record. In the Board's view, Commenter has had ample opportunity to submit its views, and did submit written comments that have been carefully considered by the Board in acting on the proposal. Commenter's request fails to demonstrate why its written comments do not adequately present its evidence and fails to identify disputed issues of fact that are material to the Board's decision that would be clarified by a public meeting or hearing. For these reasons, and based on all the facts of record, the Board has determined that a public meeting or hearing is not required or warranted in this case.

(8.) Commenter also has requested that the Board delay action on the proposal for at least 90 days. The Board is required under applicable law and its processing procedures to act on applications submitted under the BHC Act within a specified time. The Board has reviewed Commenter's request in light of these requirements and the record compiled in this case. As noted above, Commenter was afforded ample opportunity to comment and its comments were carefully considered. Based on a review of all the facts of record, the Board concludes that the record in this case is sufficient to warrant Board action on the proposal at this time, and further delay is not warranted.